Barrick Gold (ABX.TO) and Goldcorp Inc. (G.TO), the world's
largest producers of the metal, are poised to outperform bullion
after gold-mining companies fell to their cheapest in at least a
decade, executives said, according to a Bloomberg report.
Gold producers are heading for an "inflection point" triggering
a rally, Barrick Chief Executive Officer Aaron Regent said in an
interview. They have been punished as investors decided the shares
should no longer trade as a proxy for physical gold, he said.
The growing popularity of gold-backed exchange traded funds, or
ETFs, which include the $73.3 billion SPDR Gold Trust, probably
have taken away some of the capital that previously was invested in
companies such as Toronto-based Barrick, Regent said. Investors
have shunned gold producers choosing instead to hold physical metal
and ETFs after gold prices advanced in 11 successive years and
touched a record in September.
Bloomberg said the NYSE Arca Gold BUGS Index (HUI), which
includes Barrick and 16 of its competitors, has advanced 53% in the
past five years while spot gold traded in London has more than
doubled. The index trades at about 17 times earnings, compared with
an average of 65 over the past 10 years. The ratio fell to a decade
low of 15 on Jan. 20.
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